Heartland bank to be a niche player
The proposed “heartland bank” will become the biggest of the remaining 40 or so non-bank deposit taking (NBDT) institutions while it tries to achieve a banking licence.
Thursday, November 25th 2010, 7:18AM
by Jenny Ruth
Once it does get that licence, it will become the smallest of the banks operating in the home loans, small-to-medium business lending, motor vehicle financing and rural markets, the major areas it will target.
That, combined with the three merger partners' (Pyne Gould's Christchurch-based Marac, Canterbury Building Society and Auckland-based Sourthern Cross Building Society) existing regional customer and investor bases, is where the "heartland" moniker comes from.
Because the merged company wants to provide financial services to "middle" New Zealanders.
The merged company will retain all three existing brands but will also decide on an over-arching name by February which may or may not be "heartland."
"We haven't ruled anything in or out in terms of brand. It's a complex exercise and everybody's got a view," says Marac chief executive Jeff Greenslade who will become the merged company's chief executive.
Don't expect any Aussie bank-bashing a la the government's Kiwibank but, as with the three existing locally-owned banks, the "heartland" organisation will be making similar parochial appeals.
"I've got a lot of respect for the major banks. They offer good products. It's just that we're different," Greenslade says. "If you're New Zealand-controlled, you're clearly in a better to deliver a New Zealand-centred service."
As he sees it, the merged company won't be competing head-on with the major banks but will be concentrating on niche areas they aren't interested in servicing. "We have to be very careful we preserve the advantages of being small," Greenslade says.
Small it will be. The merged company will have about $2.2 billion in total assets, putting it behind customer-owned SBS Bank whose total assets at June 30 were $2.58 billion.
Of the other two New Zealand-owned banks, community-owned TSB Bank's total assets at June 30 were $4.42 billion while Kiwibank's were $12.24 billion.
Currently, Marac doesn't write residential mortgages and the two building societies' combined mortgage book at June 30 was just $278.5 million.
HSBC is in the process of running down its mortgage book but still had $0.94 billion at June 30. SBS's book was $1.71 billion while the largest player in the mortgage market, ANZ National Bank, had nearly $51 billion in mortgages.
The merged entity's largest presence at June 30 was in the motor vehicle market where its assets totalled $500.8 million. Commercial plant and equipment accounted for $447.6 million.
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